The plunging price of gold is an expression of hope by the markets

Gold is the ultimate hedge against bad stuff. If people are selling it, maybe things aren't so bad.

One of the big market stories of the day is the continued decline of precious metals. The price of gold is almost 20 per cent off its late 2012 high of $1,794 per oz, and a huge chunk of that fall has happened in the last two weeks – this morning alone, it's down 3.8 per cent and is still falling.

It's always tricky to read anything into market movements, unless they're as obvious a boom-and-bust cycle as something like Bitcoin, and that goes double for something like gold. It, and precious metals in general, have semi-unique fundamentals, because nearly all of their worth is tied up in the collective agreement that they are valuable. A bar of gold is worth money because everyone agrees it is worth money; contrast that with a barrel of oil, which can be used to make things and provide energy, or a share in a company, which might pay dividends.

But the price of gold isn't just driven by unpredictable speculation. The whole thing is wrapped up in beliefs about the nature of fiat currency, inflation, and macroeconomics. Joe Weisenthal explains:

On one hand you have established economists, who believe the government has tools at its disposal to address a crisis. These tools include deficit spending and a violent expansion of the Fed’s balance sheet.

Conversely you have critics who slam the arrogance of economists and central planners, and who have predicted that all of this economic acrobatics would result in an economic collapse, hyperinflation, and an explosion in the price of gold. Gold is important to their worldview, because it represents a quasi-money that’s not tied to any government or central bank.

Investing in gold is a rejection of government money and finance. Money flowing into gold-related assets represents a belief that rocks (however shiny they are) are a better place to invest than human endeavors (like stocks).

You can see this belief reflected in the tendency sites like ZeroHedge have towards showing things priced "in gold". So, for instance, the S&P priced in gold has been shrinking since 2000: the idea is that gold is still the only real money, and must therefore be the point from which all other observations are made. (Paul Kedrosky took this to its logical conclusion, charting the price of gold in gold)

But regardless of the reasons for the collective agreement that gold holds value, it does. And that means it has some properties as an investment vehicle. Traditionally, it's thought to be good to own in periods of high inflation and poor growth in the value of the stock market, and Paweł Morski points out what the logical conclusion of that is:

Gold – unlike bank deposits, equity or bonds, or even banknotes – is separate from the real economy: it’s what you invest in when you want to take a breather from what’s happening in the real economy. That’s actually only a sensible thing to do in pretty extreme circumstances. Gold returns are utterly crushed by equity markets in the long term – to a really astonishing degree for those economies where we have continuous equity markets.

Compared with shares in pre-revolutionary China or pre-war Poland, gold returns look pretty good. Gold is less an index of how confident we are that our leaders a) want to b) know how to do the right thing as it is an index of how sure we are that they won’t completely and utterly screw the pooch.

Also worth quoting is Morksi's absolute belter, because just look at it:

I have nothing to say about the Gold Standard other than it’s the obvious solution for those who feel the main problems with the euro are that it’s too flexible and covers too few countries.

Gold is an oddity, but the people who buy it say something very real about faith in the economic system. It may not be particularly good for hedging against downsides within that system, but as one of the few ways people can hedge against the total breakdown of order, it has a purpose. The continued slide, therefore, is a rare sign of hope in these beleaguered days. Some people, at least, think we're further from armageddon than we used to be.

Gold bars. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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In defence of the metropolitan elite

Railing against low-paid academics will not solve Britain's inequality problem. 

It’s a measure of how topsy-turvy our political culture has become that Theresa May, a Conservative, Oxford-educated prime minister, can claim to be on the side of "ordinary working-class people" against a sneering "elite". But while Brexit has made this division central to our political culture, we’ve been heading in this direction for a while. 

Earlier this year, I was watching a heated exchange between centrist Labour MP Alan Johnson and Left Unity’s Simon Hardy on the Daily Politics show. At one point, Johnson bellowed across the table: "You’re a middle-class intellectual!" So this is now a stand-alone insult, I thought to myself, and took to Twitter to share my indignation. A friend immediately replied: "He means you." And she’s right. I am indeed a middle-class intellectual, a member of the metropolitan elite. Given the prevalence of post-Brexit elite-bashing, I’m loath to stick my head above the parapet. But as my liberal intellectual English lecturers used to say, these terms need unpacking. 

The right-wing anti-elitism that we are seeing all around us co-opts the left’s opposition to financial and corporate dominance and converts it into opposition to those who are educated. To listen to Tory speeches now it’s as if the top 1 per cent didn’t own half the world’s wealth, as if the sales of individual global corporations hadn’t overtaken many national economies, as if CEOs didn’t earn 300 times the salary of the average worker. No, it’s the liberal, metropolitan elite that’s the real menace – those mighty "experts" and "commentators". As Michael Gove, another Oxford-educated Tory, declared during the EU referendum: "People in this country have had enough of experts." 
Anti-elitism conflates political office and cultural and educational distinction on the one hand, with social privilege on the other. But there’s no intrinsic reason why there should be a homogenous "political class", or that those with expertise or artistic judgement should necessarily be rich. In 1979, 16 per cent of MPs had a background in manual work; in 2010 the proportion had dropped to 4 per cent. The history of the Worker’s Educational Association and the Open University reveals a lively tradition of working-class intellectualism. It’s true that, right now, political and cultural capital are appallingly centralised, and there is a revolving door between ministerial office and business. The range of people entering the arts and higher education has been narrowed by the removal of social security and block grants.

Today's anti-elitism, far from empowering the disenfranchised, covertly promotes neoliberal economics. High standards are equated with having the upper hand. Attacks on "cosmopolitan elites" - i.e. those who benefited from affordable education - entrench inequality, put the left on the back foot and protect the real elites – all this while producing a culture that’s bland, dumbed-down and apologetic.
This manoeuvre is everywhere. Brexit is a surreal pageant of inverted protest - May’s use of the royal prerogative supposedly represents the will of the people. The beneficiaries of the PM's grammar school "revolution", she claims, will be "the hidden disadvantaged children". Those who question the evidence base for this are simply metropolitan snobs. ‘This is post-referendum politics’, the BBC’s education editor reminded us tellingly on Today, ‘where the symbolic status of grammar schools as a chance to better yourself has trumped the expert consensus’.
The higher education bill currently going through Parliament brandishes the downtrodden student consumer as a stick with which to beat academics. According to the business-friendly University Alliance, academia’s reluctance to emphasise "employability" carries "more than a whiff of snobbery". Top-down curation is out; impact, feedback and engagement the new mantra. With their worth constantly weighed against the most pressing social priorities, cultural organisations no longer seem convinced by their own right to exist.
The "democratisation" of education, media and culture must be recognised for what it is -  a proxy for real democracy and any attempt to tackle social and economic inequality. Just as the redistributive work of politics is shunted onto embattled and underfunded sectors, the same anti-elitist pressure weakens politics itself. Democracy is thoroughly distorted by economic forces. But the solution is not, as right-wing populists do, to attack the system itself - it’s the only means we have of creating a fairer world. 
This anti-political sentiment is aimed disproportionately at the left, at do-gooding idealists and defenders of the "patronising" welfare state. Stricken with anxiety about being out of touch with its former heartlands, Labour is unable to strategise, put up a credible leader, or confidently articulate its principles. Unless it can tell a positive story about informed debate, political institutions and – yes – political authority, the left will remain vulnerable to whatever Ukip contorts into next.

It’s time to stand up proudly for good elitism – for professional judgement, cultural excellence and enlightenment values. Once, conservatives championed political authority and high art. But now that they’ve become scorched-earth modernisers, it’s time for progressives to carry the torch. Otherwise, disparities of wealth will become ever sharper, while the things that give our lives meaning dissolve into mediocrity.



Eliane Glaser is a senior lecturer at Bath Spa University and author of Get Real: How to See Through the Hype, Spin and Lies of Modern Life.